Brokerages cheer Apollo Hospitals' strong growth outlook across segments

Apollo Hospitals' net profit as well as revenue topped the Street's estimates in Q1.

Brokerages across the Street rolled out bullish calls for healthcare services major, Apollo Hospitals, impressed not only by the company's strong Q1 FY25 performance but also by its promising growth outlook across all major business segments.

Apollo Hospitals delivered a beat on its net profit as well as revenue for the June quarter. The company's consolidated net profit for Q1 FY25 surged 83 percent on year to Rs 305 crore, topping Moneycontrol's estimate of Rs 287 crore. Revenue also grew 15 percent to Rs 5,086 crore in the quarter gone by, also better than the estimated Rs 5,072 crore.

Along with that, all major segments of the company--healthcare services, Apollo Health and Lifestyle, and Apollo HealthCo--each delivered 15 percent revenue growth in the quarter gone by.

Furthermore, the management also guided for a 100 basis points margin expansion for its healthcare services business in FY25, pharmacy growth of 20 percent and Apollo 24/7 breakeven in the next six-seven quarters.

Also Read | Apollo Hospitals shares rise on better-than-expected Q1 earnings

Along those lines, brokerage firm Nuvama Institutional Equities feels Apollo's confidence on reaching 20 percent margin (pre-24/7 operating costs), up from the current 13.6 percent by FY25-end and Apollo 24/7 breakeven in six–seven quarters is promising. In addition, Nuvama also believes the integration of pharmacy distributor Keimed, that is on the cards is likely to accelerate Apollo's growth and improve margins.

Consequently, the brokerage raised its price target on Apollo Hospitals by over 6 percent to Rs 7,500 while retaining its 'buy' call on the stock.

Motilal Oswal Financial Services also like Apollo's efforts to commission acquired hospitals after
refurbishing or adding medical equipment, getting regulatory approval for its greenfield hospital project, and optimisation of its Apollo 24/7 business. Accordingly, MOFSL estimates a CAGR (Compound Annual Growth Rate) of 21 percent for EBITDA and 41 percent for earnings over FY24-26.

MOFSL also maintained its 'buy' call on the stock with a price target of Rs 7,940, implying a 22 percent upside potential.

On the other hand, HSBC, which has a 'buy' rating for Apollo Hospitals with a target price of Rs 7,215, believes that the launch of its insurance service through its 24/7 platform will be key.

At 09.18 am, shares of Apollo Hospitals were trading over 1 percent higher at Rs 6,600 on the NSE.

Also Read | Apollo Hospitals' flagship healthcare services biz to see 100 bps margin expansion over next 4 quarters

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